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Reports: JPMorgan may pay $2B in Madoff case

JPMorgan Chase is reportedly close to a $2 billion settlement over its failure to alert authorities to suspicions about Bernard Madoff, the central figure in a massive Ponzi scheme that cost investors $17.3 billion.

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JPMorgan Chase is close to a $2 billion settlement with federal authorities to avoid prosecution for its failure to properly alert regulators of its suspicions about Ponzi scheme mastermind Bernard Madoff, according to reports.

The settlement would include a deferred prosecution agreement and more than $1 billion in penalties to resolve the criminal case, reported the New York Times and the Wall Street Journal, citing people who were briefed on the matter. Washington regulators would impose the rest of the fines over the failure by the nation's largest bank to implement proper money-laundering safeguards.

A sizable part of the settlement with federal prosecutors in Manhattan will be used to compensate Madoff's victims, the Times report said.

The negotiations over the settlement come amid the anniversary of Madoff's arrest for the $17.3 billion investment fraud five years ago on Wednesday. The deferred prosecution agreement — in which the bank would have to carry out certain requirements to avoid prosecution – would list criminal violations and require the bank to acknowledge them, the Times reported.

Prosecutors say JPMorgan, which served as Madoff's primary bank for two decades, failed to alert U.S. regulators about suspicious transactions even after it filed such a document with authorities in the United Kingdom, according to the WSJ report.